Forum for Science, Industry and Business

Eastern promise for outsourcing software

09.06.2004

With numerous European companies caught in a dilemma of growing technology demands and shrinking IT budgets, outsourcing software development to Russia and the Newly Independent States (NIS) is an increasing attractive option.

ADONIS, an IST programme-funded project, is meeting the challenges of this dilemma by assisting European organisations and businesses to outsource software development in collaboration with programmers in Russia and the NIS of the former Soviet Union, primarily Ukraine and Armenia. This is a win-win endeavour - European companies can offer their products and services at competitive prices, while opportunity is created in the participating NIS. Both benefit from rich research and development collaboration.

The 10-member consortium collaborated to set up and test a pan-European network of services for outsourcing software tasks. Project partners have since formed a Brussels-based company, NewAdonis SPRL. Outsourcing to NIS and Russia holds "very high potential", according to project manager and company Director Dr Ruben Vardapetian.

"The results of 16 pilot projects are still being analysed, but the three countries, including Belarus, have a huge intellectual capital largely unexploited by Europe and unused by their own countries," he explains.

Global software outsourcing is a lucrative, multibillion-euro business, with the lions share going to India. But Russia is among the rising stars with an annual turnover of €400 million. NIS and Russia offer rapidly growing economies and large, highly educated populations willing to work for lower wages than their European counterparts. Outsourcing is not an entirely new phenomenon in the region. Vardapetian notes that Armenia was producing both hardware and software for the Soviet military since the 1950s.

What is new, however, is the growing recognition of companies in Europe and across the Atlantic of its benefits. Outsourcing is becoming synonymous with outsmarting, offering companies the ability to reduce costs, focus on core business activities, compensate for lack of IT staff and access specialised expertise at a highly competitive price.

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